Q: What are the advantages of a stock sale over an asset sale?
A: The advantage of an asset sale to the Buyer is that the Buyer can avoid undertaking any unwanted liabilities of the Seller. The advantage of a stock sale to the Seller is that he can avoid any depreciation recapture from the sale of equipment. However, if done properly the asset sale can work as well as a stock sale for the Seller. The result is usually the creation of good will which the Buyer will amortize over 15 years. There are a lot of variations of these two sales and each has its advantages and disadvantages, especially if the Seller has a loss carry-forward that the Buyer wants to use against its operating profits. There are plenty of books on Mergers and Acquisitions that explain the various types of Mergers and Acquisition structures. Some are better for certain kinds of businesses than others.
A: There may be more risk with a stock sale, and there may be less value with an asset sale (if excluding stocks). More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website, www.AEesq.com. I practice law in CA, NY, MA, and DC in the following areas of law: Business & Contracts, Criminal Defense, Divorce & Child Custody, and Education Law. This answer does not constitute legal advice; make any predictions, guarantees, or warranties; or create any Attorney-Client relationship.
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